Recessions and Financial Disruptions in Emerging Markets: A Bird´s Eye View.

This paper provides an overview of the implications of recession and financial disruption episodes in emerging markets. We report three major findings. First, compared to advanced countries, recessions and financial disruptions in emerging markets are often more costly. Second, recessions associated with financial disruption episodes, such as credit crunches, equity price busts and financial crises, tend to be deeper than other recessions in emerging markets. Third, the temporal dynamics of macroeconomic and financial variables around these episodes in emerging markets are different than those in advanced countries. In light of these broad observations, the paper provides a review of recessions and financial market disruptions in Chile

The global financial crisis: how similar? How different? How costly?

This paper provides a brief analysis of three major questions raised in the context of the recent global financial crisis. First, how similar is the crisis to previous episodes? We argue that the crisis featured some close similarities to earlier ones, including the presence of credit and asset price booms fueled by rapid debt accumulation. Second, how different is it from earlier episodes? We show that, as much as it displayed some similarities with previous cases, it also featured some significant differences, such as the explosion of opaque and complex financial instruments in a context of highly integrated global financial markets. Third, how costly are recessions that followed these types of crises? Although the latest episode took a very heavy toll on the real economy, we argue that this was not a surprising outcome. In particular, historical comparisons indicate that recessions associated with periods of deep financial disruptions result in much larger declines in real economic activity. We discuss the implications of these findings for economic and financial sector policies and future research

Financial Stability Governance and Communication

Resumen de la comunicación[EN] We investigate how differences in governance frameworks across central banks explain their financial stability communication strategies and the effect of these strategies on the evolution of each country’s financial cycle. To do so, we propose a simple conceptual framework that explains how central banks conduct their communication strategy, which eventually affects the evolution of financial conditions. To empirically validate our framework, we use a database with the financial stability governance characteristics of 24 central banks and the sentiment conveyed in the financial stability reports published by these central banks. We find that, after observing a deterioration of financial conditions, central banks participating in interagency financial stability committees or with an oversight role transmit a calmer message than banks without these characteristics. We also find that the effect of communication on the evolution of the financial cycle depends on each central bank's governance framework. In particular, communication by central banks participating in an interagency financial stability committee or with a financial supervisory role has an alleviating effect on the deterioration of financial conditions.Londono, JM.; Claessens, S.; Correa, R.; Mislang, N. (2018). Financial Stability Governance and Communication. En 2nd International Conference on Advanced Reserach Methods and Analytics (CARMA 2018). Editorial Universitat Politècnica de València. 262-262. https://doi.org/10.4995/CARMA2018.2018.8577OCS26226

Corporate financial policies and performance around currency crises

Using data from 17 countries that have suffered a currency crisis, this paper studies firm-level leverage and performance measures before and after a crisis has occurred. We show that in the years preceding a currency crisis, companies that are expected to benefit from currency depreciations increase their leverage more than companies that are expected to be harmed by currency depreciations. The evidence regarding the profitability and financial fragility ratios is consistent with the leverage results, since companies that are expected to benefit from depreciations fare worse than other companies before a crisis. We also provide evidence that the Asian crisis is different from the previous European and Latin American ones: in Asia firms become more fragile after the crisis and their profitability declines and leverage increases further, whereas in Europe and Latin America there are clear signs of recovery after a crisis has occurred, especially for firms that are ex-ante expected to benefit from depreciations

Access to finance: an empirical analysis

YesFinancial access is gradually being recognised as an important input to economic development. Using World Bank (2007) database, this study measures the extent of financial access in developed and developing countries. Further, it develops a new Socio-Economic Development Index, which incorporates financial access. It then compares socio-economic development of various countries as shown by Human Development Index (HDI) alone and by the new index incorporating financial access. The results of the study show that Spain ranks highest in terms of financial access followed by Belgium, Malta and South Korea. In addition, the ranking of countries in terms of HDI changes if financial access is taken into accoun

Are Foreign Firms Privileged By Their Host Governments? Evidence From The 2000 World Business Environment Survey

Using the data from World Business Environment Survey (WBES) on over 10,000 firms across eighty one countries, this paper finds preliminary evidence that foreign firms enjoy significant regulatory advantages - as perceived by the firms themselves - over domestic firms. The findings on regulatory advantages of foreign firms hold with a variety of alternative measures of regulations and with or without firm- and country-level attributes and industry and country controls. There is also evidence that foreign firms' regulatory advantages are especially substantial vis-a-vis the politically weak domestic firms. Furthermore, the regulatory advantages of foreign firms appear stronger in corrupt countries than in non-corrupt countries